File Photo: The Central Bank of Egypt (Photo: Al-Ahram)
These procedures were discussed during a meeting held on Monday with the principals of external trade and liabilities of major banks and chaired by the CBE’s sub-governor Gamal Negm.
The CBE has not yet officially announced these procedures.
According to an internal local bank circular seen by Ahram Online, the procedures include accepting the firms’ deposits in hard currencies that are yielded from export transactions with companies from Syria, Sudan, Palestine, Yemen, Iraq and Libya.
The CBE will also allow the companies to use these sums in import transactions under the condition that the deposits’ total value is appropriate to the size and type of the company’s business activity.
In addition, the CBE will oblige banks to revert to it in case the foreign-exchange deposit transactions are made with companies from countries other than the ones named.
The procedures also include allowing local banks to use the foreign-exchange balances of the mother companies that are yielded from import transactions provided they are sold to local banks. In this case, the CBE will allow local banks to resell these balances through 19 September without applying buy and sell margins.
Meanwhile, the CBE instructed banks to follow Decree 126/2022 issued by the minister of trade and industry that allows the release of imported items for personal use under the condition that their value does not surpass $25,000 once per six months.
If the value exceeds this limit, the importers must pay the entire value of the imported items in advance.
Moreover, the CBE will exclude foreign inputs that are included in locally assembled electronic appliances from the measures set by its decree no.49 issued on 13 February 2022.
In February, the CBE issued new rules obliging all importers to use letters of credit (LCs) to finance their imports, eliminating the earlier collections system that was in force for many years. It excluded foreign companies and subsidiaries from the rules.
Importers objected to the LC system, saying it would harm their supply chain and increase production costs, leading to higher inflation. They also said that the new system would take more time and put capital on hold.
As a result, a presidential decree issued in May exempted importers of production supplies and raw materials from the LC requirement.
President Abdel-Fattah El-Sisi also instructed the government to form a working group chaired by Prime Minister Mostafa Madbouly and comprising the CBE governor and representatives of the ministries of finance and trade and industry and other institutions to follow up the implementation of the new procedures periodically.
According to the new procedures, the CBE allowed mother firms and sister firms abroad to provide loans in hard currency for their affiliated companies in the local market in order to finance import transactions with a maturity not below one year, provided that the bank is not responsible for providing the foreign exchange upon the loans’ due time.
On the other hand, the CBE will allow the collection document system through 19 September, with importers required to submit the documents that show they have paid the entire value of their shipments.
The CBE also okayed financing import transactions using the foreign-exchange transfers to local banks that stem from dividend or capital increase of the mother company or one of its partners or shareholders.
The CBE also said that it will not accept hard-currency deposits that are made by individuals for Egyptian firms, as this type of transaction is against the law.